Horizon Kinetics Holding

Good afternoon, everyone. Thank you for joining us on this call. My name is Mark Herndon, Chief Financial Officer of Verizon Kinetics. We are pleased to have you join us for our call that will cover our results for the third quarter of 2025. But first, a reminder that today's presentation may include forward-looking statements. Reliance on forward-looking statements involves certain risks and uncertainties, including but not limited to uncertainty about the future security valuations or our performance. During the course of today's call, words such as expect, anticipate, believe, and intend may be used in our discussion of our goals or events in the future. Management cannot provide any assurances that future results will be described in our forward-looking statements. Furthermore, the statements made on this call apply only as of today. The information on this call should not be construed to be a recommendation to purchase or sell any security, particularly security or investment fund. The opinions referenced on this call today are not intended to be a forecast of future events or a guarantee of future results. It should not be assumed that any of the security transactions referenced today have been or will prove to be profitable or that future investment decisions will be profitable or will equal or exceed past performance of the investments. We encourage you to read our filings with the SEC on our form 10-K, as well as our other filings, which describe the risks and uncertainties associated with managing our business The company does not assume any obligation to update any forward-looking statements made today. These filings can also be found at the OTC Markets website, and our press releases or other information is at our corporate website at www.hkholdingco.com. Today's discussion will be led by Murray Stahl, Horizon Kinetics Chairman and Chief Executive Officer. I will also be available to answer questions, applicable questions, and will moderate the questions. If you would like to ask a question, you will need to be logged in and connected to the GoToMeeting platform. Those of you on a telephone connection will be in listen-only mode. So, again, for those of you that are on the GoToMeeting platform, you can submit the questions via the chat function. Please direct those questions to the presenters while I will summarize and relay as best I can so that we can address as many questions as possible. With that, I'll turn it over to Murray to start us off.

Okay, thank you, Mark, and thank you all for joining us. So I will lay out the format for today. So when there's a minute or two, I'm going to turn it over to Mark Herndon. He's going to review the financials, then I'll take it over, I'll take it back. And I might go into a little detail of a financial high point that I think is Merit's note. And then... I will talk about strategy and how we're going forward and some interesting things that we are in the process of doing and some other things that we hope to be doing. So, with that, Mark, you can describe the financial results and you can relay it to me after that.

Great. And as a reminder for everyone, our form 10-Q update continues to be our required GAP presentation that includes certain proprietary funds as consolidated entities, and our press release continues to present both that gap presentation as well as a supplement that provides our financial statements excluding those funds. We call that the advisor-only presentation. Consistent with what we have previously reported, this is a presentational matter that does not impact the company's earnings available to HKHC shareholders or the shareholders' equity of HKHC. The consolidated results present higher total assets as we include the investment assets of those funds that we've consolidated on our balance sheet, as well as a line item called redeemable non-controlling interest. That line item essentially represents our client's account balances that are supported by the assets of those funds, which you'll see identified in our financial statements as consolidated investment products. Another notable difference is the treatment of management fees charged to those Consolidated investment products. Under DAP, those revenues are eliminated for consolidation since the fund is presented within the financial statements. It is akin to an intercompany transaction. However, the economic benefit resulting to HKHC shareholders remains, and that economic benefit is reflected through a smaller allocation of the investment returns of the consolidated investment products to the redeemable non-controlling interest than what they would otherwise have received. You can also see the impact of those items and a table within the ND&A of our 10Q filing. Our results this quarter continue to be favorable for HKHC shareholders. The company recorded revenues of $17.9 million for the quarter, a $4.8 million or 37% increase from the third quarter of 2024. The year-to-date period was similarly higher with a $55.8 million of revenues thus far in 2025, which was 49% higher than 2024's year-to-date period. These increases are primarily the result of the overall increase in AUM across the portfolio of investment products and client accounts compared to 2024. At the advisor-only level, as presented in the supplemental table within the press release, operating income was $5.5 million for the third quarter, up from $1.5 million in the prior year, and the year-to-date period was $16.1 million as compared to $5.4 million in the prior year. These results were driven primarily by the revenue growth we just mentioned. Overall, the company's net income was $0.39 per share for the quarter and $1.05 per share for the year-to-date period. And please note that our net income or loss is often impacted by swings and unrealized gains or losses associated with certain investments, including digital assets. This quarter, that included an aggregate of $10.1 million of unrealized losses related to our investment securities and equity holdings in our property. proprietary funds. Those unrealized losses compare to the third quarter of 2024, which had unrealized gains aggregating about $31.6 million. This is an illustration of what we have previously noted for you that may result in seeing volatility from quarter to quarter as a result of unrealized gains or losses in various holdings, including those digital assets, which is primarily Bitcoins. I should also note that the third quarter of 2024, last year, also included the cumulative tax adjustment for converting from a taxpayer entity to a C-Corp, which resulted in an approximately $60 million deferred tax liability and expense upon the adoption of that status. That deferred tax value on the balance sheet changes quarterly based on movements in the underlying cumulative tax differences, including investment holdings or applicable tax rates. From a cash perspective, the company has paid approximately $4 million in income taxes in 2025 year-to-date. From a balance sheet perspective, the company continues to have substantial cash investments, including amounts outside of the consolidated investment products, and we have no third-party debt. Our long-term liabilities are limited to various long-term office space leases. The company's board recently declared a 10.6 per share dividend, excuse me, 10.6 cents per share dividend, which reflects a 49% increase from the prior quarter's dividend. This dividend will be paid on December 17th for shareholders of record as of November 25th. That concludes the prepared remarks. I'll turn it back over to you, Murray, to say a few words before we get into Q&A.