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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One) 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

 

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to

 

Commission File Number: 001-38980

 

ASSETMARK FINANCIAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

(State or other jurisdiction of

incorporation or organization)

 

 

 

30-0774039

(I.R.S. Employer

Identification Number)

 

 

 

 

 

 

 

1655 Grant Street, 10th Floor

Concord, California 94520

(Address of principal executive offices)

 

 

 

 

 

 

 

 

 

(925) 521-2200

(Registrant’s telephone number, including area code)

 

 

 

 

 

 

 

 

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

 

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, par value $0.001 per share

AMK

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No  

As of April 30, 2022, the number of shares of the registrant’s common stock outstanding was 73,594,027.

 

 

 

 


 

ASSETMARK FINANCIAL HOLDINGS, INC.

 

TABLE OF CONTENTS

 

 

 

 

 

 

Page No.

 

Special Note Regarding Forward-Looking Statements

2

 

Summary of Risk Factors

3

 

 

 

 

PART I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements (unaudited)

4

 

Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021

4

 

Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2022 and 2021

5

 

Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021

6

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021

7

 

Notes to Unaudited Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

30

Item 4.

Controls and Procedures

31

 

 

 

 

PART II.  OTHER INFORMATION

 

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

52

Item 3.

Defaults Upon Senior Securities

52

Item 4.

Mine Safety Disclosures

53

Item 5.

Other Information

53

Item 6.

Exhibits

54

 

Signatures

55

 

 

 

1


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. For example, statements in this Form 10-Q regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “would,” “could,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of these terms and other comparable terminology that conveys uncertainty of future events or outcomes. In addition, any statements that refer to projections of our future financial performance and financial results; our anticipated growth strategies and anticipated trends in our business; our expectations regarding our industry outlook, market position, liquidity and capital resources, addressable market, investments in new products, services and capabilities; our ability to execute on strategic transactions; our ability to comply with existing, modified and new laws and regulations applying to our business; the impacts of the COVID-19 pandemic on our operations; demand from our customers and end investors; and other characterizations of future events or circumstances are forward-looking statements. These statements are only predictions based on our current expectations and projections about future events and are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and are subject to risks, uncertainties and assumptions, including those identified under “Item 1A. Risk Factors,” any of which could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. While we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. We are under no duty to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q to conform our prior statements to actual results or revised expectations, except as required by law. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements as predictions of future events.

 

2


 

SUMMARY OF RISK FACTORS

Our business is subject to numerous risks and uncertainties, any one of which could materially adversely affect our results of operations, financial condition or business. These risks include, but are not limited to, those listed below. This list is not complete, and should be read together with the section titled “Risk Factors” in this Quarterly Report on Form 10-Q, as well as the other information in this Quarterly Report on Form 10-Q and the other filings that we make with the U.S. Securities and Exchange Commission (the “SEC”).

 

 

Our revenue may fluctuate from period to period, which could cause our share price to fluctuate.

 

 

We operate in an intensely competitive industry, and this competition could hurt our financial performance.

 

 

We derive nearly all of our revenue from clients in the financial advisory industry and our revenue could suffer if that industry experiences a downturn.

 

 

Investors that pay us asset-based fees may seek to negotiate lower fees, choose to use lower-revenue products or cease using our services, which could limit the growth of our revenue or cause our revenue to decrease.

 

 

Investors may redeem or withdraw their investment assets generally at any time. Significant changes in investing patterns or large-scale withdrawal of investment funds could have a material adverse effect on our results of operations, financial condition or business.

 

 

Changes in market and economic conditions (including as a result of the ongoing COVID-19 pandemic or geopolitical conditions or events) could lower the value of assets on which we earn revenue and could decrease the demand for our investment solutions and services.

 

We may be subject to liability for losses that result from a breach of a third party’s fiduciary duties.

 

We are exposed to data and cybersecurity risks that could result in data breaches, service interruptions, harm to our reputation, protracted and costly litigation or significant liability.

 

 

Our controlling stockholder is subject to supervision by regulatory authorities in the People’s Republic of China (“PRC”) and must comply with certain PRC laws and regulations that may influence our controlling stockholder’s decisions relating to our business.

 

 

We are subject to extensive government regulation in the United States, and our failure or inability to comply with these regulations or regulatory action against us could adversely affect our results of operations, financial condition or business.

 

 

Failure to properly disclose conflicts of interest could harm our reputation, results of operations or business.

 

 

Control by our principal stockholder could adversely affect our other stockholders.

3


 

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements.

AssetMark Financial Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands except share data and par value)

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

98,717

 

 

$

76,707

 

Restricted cash

 

 

13,000

 

 

 

13,000

 

Investments, at fair value

 

 

14,461

 

 

 

14,498

 

Fees and other receivables, net

 

 

9,075

 

 

 

9,019

 

Income tax receivable, net

 

 

 

 

 

6,276

 

Prepaid expenses and other current assets

 

 

13,696

 

 

 

14,673

 

Total current assets

 

 

148,949

 

 

 

134,173

 

Property, plant and equipment, net

 

 

7,724

 

 

 

8,015

 

Capitalized software, net

 

 

77,130

 

 

 

73,701

 

Other intangible assets, net

 

 

707,522

 

 

 

709,693

 

Operating lease right-of-use assets

 

 

21,425

 

 

 

22,469

 

Goodwill

 

 

436,821

 

 

 

436,821

 

Other assets

 

 

3,184

 

 

 

2,090

 

Total assets

 

$

1,402,755

 

 

$

1,386,962

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,384

 

 

$

2,613

 

Accrued liabilities and other current liabilities

 

 

46,010

 

 

 

56,249

 

Income tax payable, net

 

 

397

 

 

 

 

Total current liabilities

 

 

48,791

 

 

 

58,862

 

Long-term debt, net

 

 

116,735

 

 

 

115,000

 

Other long-term liabilities

 

 

16,463

 

 

 

16,468

 

Long-term portion of operating lease liabilities

 

 

27,089

 

 

 

28,316

 

Deferred income tax liabilities, net

 

 

158,930

 

 

 

158,930

 

Total long-term liabilities

 

 

319,217

 

 

 

318,714

 

Total liabilities

 

 

368,008

 

 

 

377,576

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.001 par value (675,000,000 shares authorized and 73,594,027 and 73,562,717 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively)

 

 

74

 

 

 

74

 

Additional paid-in capital

 

 

932,212

 

 

 

929,070

 

Retained earnings

 

 

102,461

 

 

 

80,242

 

Total stockholders’ equity

 

 

1,034,747

 

 

 

1,009,386

 

Total liabilities and stockholders’ equity

 

$

1,402,755

 

 

$

1,386,962

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

4


AssetMark Financial Holdings, Inc.

Unaudited Condensed Consolidated Statements of Comprehensive Income

(in thousands except share and per share data)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Revenue:

 

 

 

 

 

 

 

 

Asset-based revenue

 

$

142,076

 

 

$

115,813

 

Subscription-based revenue

 

 

3,318

 

 

 

 

Spread-based revenue

 

 

1,955

 

 

 

2,606

 

Other revenue

 

 

954

 

 

 

587

 

Total revenue

 

 

148,303

 

 

 

119,006

 

Operating expenses:

 

 

 

 

 

 

 

 

Asset-based expenses

 

 

41,687

 

 

 

36,094

 

Spread-based expenses

 

 

405

 

 

 

676

 

Employee compensation

 

 

40,290

 

 

 

67,302

 

General and operating expenses

 

 

22,059

 

 

 

17,489

 

Professional fees

 

 

5,733

 

 

 

4,260

 

Depreciation and amortization

 

 

7,469

 

 

 

9,471

 

Total operating expenses

 

 

117,643

 

 

 

135,292

 

Interest expense

 

 

1,159

 

 

 

771

 

Other expenses, net

 

 

128

 

 

 

(15

)

Income (loss) before income taxes

 

 

29,373

 

 

 

(17,042

)

Provision for (benefit from) income taxes

 

 

7,154

 

 

 

(8,126

)

Net income (loss)

 

 

22,219

 

 

 

(8,916

)

Net comprehensive income (loss)

 

$

22,219

 

 

$

(8,916

)

Net income (loss) per share attributable to common stockholders:

 

 

 

 

 

 

 

 

Basic

 

$

0.30

 

 

$

(0.13

)

Diluted

 

$

0.30

 

 

$

(0.13

)

Weighted average number of common shares outstanding,

     basic

 

 

73,571,785

 

 

 

70,422,306

 

Weighted average number of common shares outstanding,

     diluted

 

 

73,675,460

 

 

 

70,422,306

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

5


AssetMark Financial Holdings, Inc.

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

(in thousands except share data)

 

For the three months ended March 31, 2022 and 2021

 

 

 

Common stock

 

 

Additional

paid-in

 

 

Retained

 

 

Total

stockholders’

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

earnings

 

 

equity

 

Balance at December 31, 2020

 

 

72,459,255

 

 

$

72

 

 

$

850,430

 

 

$

54,571

 

 

$

905,073

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,916

)

 

 

(8,916

)

Share-based employee compensation

 

 

 

 

 

 

 

 

33,428

 

 

 

 

 

 

33,428

 

Balance at March 31, 2021

 

 

72,459,255

 

 

$

72

 

 

$

883,858

 

 

$

45,655

 

 

$

929,585

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

73,562,717

 

 

$

74

 

 

$

929,070

 

 

$

80,242

 

 

$

1,009,386

 

Net income

 

 

 

 

 

 

 

 

 

 

 

22,219

 

 

 

22,219

 

Share-based employee compensation

 

 

 

 

 

 

 

 

3,142

 

 

 

 

 

 

3,142

 

Issuance of common stock - vesting of restricted stock units

 

 

31,089

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

221

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2022

 

 

73,594,027

 

 

$

74

 

 

$

932,212

 

 

$

102,461

 

 

$

1,034,747

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 

6


 

AssetMark Financial Holdings, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income (loss)

 

$

22,219

 

 

$

(8,916

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,469

 

 

 

9,471

 

Interest

 

 

209

 

 

 

190

 

Share-based compensation

 

 

3,142

 

 

 

33,428

 

Debt acquisition write-down

 

 

130

 

 

 

 

Changes in certain assets and liabilities:

 

 

 

 

 

 

 

 

Fees and other receivables, net

 

 

(137

)

 

 

(710

)

Receivables from related party

 

 

81

 

 

 

 

Prepaid expenses and other current assets

 

 

2,541

 

 

 

804

 

Accounts payable, accrued liabilities and other current liabilities

 

 

(16,905

)

 

 

(11,028

)

Income tax receivable and payable, net

 

 

6,673

 

 

 

(8,582

)

Net cash provided by operating activities

 

 

25,422

 

 

 

14,657

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchase of investments

 

 

(1,280

)

 

 

(1,363

)

Sale of investments

 

 

361

 

 

 

151

 

Purchase of property and equipment

 

 

(361

)

 

 

(231

)

Purchase of computer software

 

 

(8,077

)

 

 

(8,002

)

Net cash used in investing activities

 

 

(9,357

)

 

 

(9,445

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from issuance of long-term debt, net

 

 

122,508

 

 

 

 

Payments on revolving credit facility

 

 

(115,000

)

 

 

 

Payments on term loan

 

 

(1,563

)

 

 

 

Net cash provided by financing activities

 

 

5,945

 

 

 

 

Net change in cash, cash equivalents, and restricted cash

 

 

22,010

 

 

 

5,212

 

Cash, cash equivalents, and restricted cash at beginning of period

 

 

89,707

 

 

 

81,619

 

Cash, cash equivalents, and restricted cash at end of period

 

$

111,717

 

 

$

86,831

 

SUPPLEMENTAL CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

Income taxes paid

 

$

532

 

 

$

464

 

Interest paid

 

$

390

 

 

$

577

 

Non-cash operating activities:

 

 

 

 

 

 

 

 

Non-cash changes to right-of-use assets

 

$

32

 

 

$

(2,263

)

Non-cash changes to lease liabilities

 

$

32

 

 

$

(2,263

)

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

7


 

AssetMark Financial Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

All dollar amounts presented are in thousands other than per share amounts for all notes.

Note 1. Overview

Organization and Nature of Business

These unaudited condensed consolidated financial statements include AssetMark Financial Holdings, Inc. (“AFHI” or the “Company”) and its subsidiaries. AFHI is the parent company of AssetMark, Inc., AssetMark Trust Company, AssetMark Brokerage, LLC, AssetMark Retirement Services, Inc., Global Financial Private Capital, Inc., Global Financial Advisory, LLC, Voyant, Inc., Voyant UK Limited, Voyant Financial Technologies Inc. and Voyant Australia Pty Ltd (collectively, the “Company”). We completed an internal restructuring on January 1, 2022, whereby AssetMark Financial, Inc. (formerly a direct, wholly owned subsidiary of AFHI) merged with and into AFHI, at which time AFHI automatically became the direct parent company of AssetMark, Inc., AssetMark Trust Company, AssetMark Brokerage, LLC, AssetMark Retirement Services, Inc., Global Financial Private Capital, Inc., Global Financial Advisory, LLC, Voyant, Inc., Voyant UK Limited, Voyant Financial Technologies Inc. and Voyant Australia Pty Ltd.

The Company offers a broad array of wealth management solutions to individual investors through financial advisers by providing an open-architecture product platform along with tailored client advice, asset allocation options, practice management, support services and technology to the financial adviser channel. The following is a description of the products and services offered by our primary operating subsidiaries.

AssetMark, Inc. (“AMI”) is a registered investment adviser that was incorporated under the laws of the State of California on May 13, 1999. AMI offers a broad array of wealth management solutions to individual investors through financial advisers by providing an open-architecture product platform along with tailored client advice, asset allocation options, practice management, support services and technology solutions to the financial adviser channel. AMI serves as investment adviser to the Company’s proprietary GuideMark Funds, GuidePath Funds and the Savos Dynamic Hedging Fund, each of which is a mutual fund offered to clients of financial advisers.

AssetMark Trust Company (“ATC”) is a licensed trust company and was incorporated under the laws of the State of Arizona on August 24, 1994. ATC is regulated by the Arizona Department of Insurance and Financial Institutions. ATC provides custodial recordkeeping services primarily to investor clients of registered investment advisers (including AMI) located throughout the United States.

AssetMark Brokerage, LLC (“AMB”) is a limited-purpose broker-dealer located in Concord, California and was incorporated under the laws of the State of Delaware on September 25, 2013. AMB’s primary function is to distribute the mutual funds of the Company and to sponsor the FINRA licensing of those AssetMark associates who provide distribution support through promotion of the AssetMark programs and strategies that employ the Company’s mutual funds.

Voyant, Inc. (“Voyant”) is a SaaS-based financial planning, wellness and client digital engagement solutions company that was originally formed in Texas on December 29, 2005 and was converted to a Delaware corporation on November 21, 2008.

Note 2. Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of only normal recurring adjustments, considered necessary for fair presentation have been included. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ended December 31, 2022 or any future period. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

8

 


AssetMark Financial Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

Risks and Uncertainties

The COVID-19 pandemic continues to evolve and has adversely impacted global commercial activities. Management expects COVID-19 related changes in market and investor behaviors to continue to impact our asset- and spread-based revenue. However, given the uncertainty around the duration and extent of the COVID-19 pandemic, management cannot predict the impact on the Company’s results of operations, financial condition or liquidity in subsequent periods.

Estimates and assumptions about future events and their effects on the Company cannot be determined with certainty and therefore require the exercise of judgment. The Company is not aware of any specific events or circumstances that would require the Company to update its estimates, assumptions or judgments or revise the carrying value of its assets or liabilities. The Company will update the estimates and assumptions underlying the consolidated financial statements in future periods as events and circumstances develop.

Geographic Sources of Revenue

Revenues attributable to customers outside of the United States totaled $3,531 and $0 in the three months ended March 31, 2022 and 2021, respectively.

 

Recent Accounting Pronouncements – Not Yet Adopted

In April 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. In January 2021, the FASB issued ASU 2021-01, which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The guidance is effective for all entities through December 31, 2022. The Company is currently evaluating the effect that ASU 2020-04 will have on its consolidated financial statements.

In August 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this Update require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The guidance is effective for the Company beginning in the fiscal year ending December 31, 2023 and will be applied prospectively upon adoption.

 

Note 3. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

Prepaid expenses

 

$

8,182

 

 

$

9,355

 

Right-of-use leases

 

 

4,245

 

 

 

4,198

 

Other

 

 

1,269

 

 

 

1,120

 

Total

 

$

13,696

 

 

$

14,673

 

 

Note 4. Goodwill and Other Intangible Assets

Goodwill

The Company’s goodwill balance was $436,821 as of both March 31, 2022 and December 31, 2021. The Company, which has one reporting unit, performed an annual test for goodwill impairment in December for the years ended December 31, 2021 and 2020 and determined that goodwill was not impaired. The Company performed a qualitative analysis of factors and determined that goodwill was not impaired as of March 31, 2022.

9


AssetMark Financial Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

Other Intangible Assets

Information regarding the Company’s intangible assets is as follows:

 

March 31, 2022

 

Gross carrying

amount

 

 

Accumulated

amortization

 

 

Net carrying

amount

 

 

Estimated remaining useful life

Indefinite-lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-dealer relationships

 

$

570,480

 

 

$

 

 

$

570,480

 

 

 

Voyant enterprise distribution channel customer

     relationships

 

 

32,100

 

 

 

 

 

 

32,100

 

 

 

Definite-lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names

 

 

45,830

 

 

 

(12,412

)

 

 

33,418

 

 

15 years

Broker-dealer license

 

 

11,550

 

 

 

(3,128

)

 

 

8,422

 

 

15 years

ATC regulatory status

 

 

23,300

 

 

 

(6,310

)

 

 

16,990

 

 

15 years

Voyant non-enterprise distribution channel

     customer relationships

 

 

9,500

 

 

 

(509

)

 

 

8,991

 

 

13 years

GFPC adviser relationships

 

 

14,250

 

 

 

(3,011

)

 

 

11,239

 

 

11 years

OBS adviser and trust relationships

 

 

9,500

 

 

 

(1,566

)

 

 

7,934

 

 

10 years

Voyant trade name

 

 

3,200

 

 

 

(218

)

 

 

2,982

 

 

10 years

Voyant technology

 

 

16,000

 

 

 

(1,333

)

 

 

14,667

 

 

8 years

Voyant non-compete agreement

 

 

400

 

 

 

(101

)

 

 

299

 

 

2 years

Total

 

$

736,110

 

 

$

(28,588

)

 

$

707,522

 

 

 

 

December 31, 2021

 

Gross carrying

amount

 

 

Accumulated

amortization

 

 

Net carrying

amount

 

 

Estimated remaining useful life

Indefinite-lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broker-dealer relationships

 

$

570,480

 

 

$

 

 

$

570,480

 

 

 

Voyant enterprise distribution channel customer relationships

 

 

32,100

 

 

 

 

 

 

32,100

 

 

 

Definite-lived intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names

 

 

45,830

 

 

 

(11,839

)

 

 

33,991

 

 

15 years

Broker-dealer license

 

 

11,550

 

 

 

(2,984

)

 

 

8,566

 

 

15 years

ATC regulatory status

 

 

23,300

 

 

 

(6,019

)

 

 

17,281

 

 

15 years

Voyant non-enterprise distribution channel customer relationships

 

 

9,500

 

 

 

(339

)

 

 

9,161

 

 

14 years

GFPC adviser relationships

 

 

14,250

 

 

 

(2,757

)

 

 

11,493

 

 

11 years

OBS adviser and trust relationships

 

 

9,500

 

 

 

(1,378

)

 

 

8,122

 

 

11 years

Voyant trade name

 

 

3,200

 

 

 

(145

)

 

 

3,055

 

 

11 years

Voyant technology

 

 

16,000

 

 

 

(889

)

 

 

15,111

 

 

9 years

Voyant non-compete agreement

 

 

400

 

 

 

(67

)

 

 

333

 

 

3 years

Total

 

$

736,110

 

 

$

(26,417

)

 

$

709,693

 

 

 

 

The weighted average estimated remaining useful life was 12.7 years for definite-lived intangible assets as of March 31, 2022. Amortization expense for definite-lived intangible assets was $2,171 and $1,450 for the three months ended March 31, 2022 and 2021, respectively. The Company performed an annual test for intangible assets impairment in December for the years ended December 31, 2021 and 2020 and determined that intangible assets were not impaired.

10


AssetMark Financial Holdings, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

Estimated amortization expense for definite‑lived intangible assets for future years is as follows:

 

Remainder of 2022

 

$

6,513

 

2023

 

 

8,684

 

2024

 

 

8,617

 

2025

 

 

8,551

 

2026

 

 

8,551

 

2027 and thereafter

 

 

64,026

 

Total

 

$

104,942

 

 

 

Note 5. Accrued Liabilities and Other Current Liabilities

The following table shows the breakdown of accrued liabilities and other current liabilities:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

Accrued bonus

 

$

7,892

 

 

$

20,718

 

Current portion of long-term debt, net

 

 

6,114

 

 

 

 

Current portion of operating lease liability

 

 

4,301

 

 

 

4,223

 

Asset-based payables

 

 

4,007

 

 

 

1,709

 

Compensation and benefits payable

 

 

3,222

 

 

 

7,182

 

Other accrued expenses

 

 

20,474

 

 

 

22,417

 

Total

 

$

46,010

 

 

$

56,249

 

 

Note 6. Other Long-Term Liabilities

Other long-term liabilities consisted of the following:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

Deferred compensation plan liability

 

$

14,348

 

 

$

14,379

 

Contractor liability

 

 

1,649

 

 

 

1,602

 

Purchase commitments related to acquisition of GFPC

 

 

466

 

 

 

487

 

Total

 

$

16,463

 

 

$

16,468

 

 

Note 7. Fair Value Measurements

The following tables set forth the fair value of the Company’s financial assets and liabilities measured at fair value in the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, based on the three-tier fair value hierarchy:

 

 

 

March 31, 2022

 

 

 

Fair Value

 

 

Level I

 

 

Level II

 

 

Level III

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities investments(1)

 

$

113

 

 

$

113

 

 

$

 

 

$

 

Assets to fund deferred compensation liability(2)

 

 

14,348

 

 

 

14,348

 

 

 

 

 

 

 

Total assets

 

$

14,461

 

 

$

14,461

 

 

$

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation liability(3)

 

$

14,348