Sylvia Fry - Senior Vice President and CCO Brian Casey - President and CEO Tiffany Kice - Chief Financial Officer

Mac Sykes - Gabelli Larry Carlin - Conestoga Capital

Thank you. Good afternoon.

And welcome to our third quarter earnings conference call. I would like to start by reading our forward-looking statements disclaimer.

The following discussion will include forward-looking statements. These forward-looking statements 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 annual report on Form 10-K for the year ended December 31, 2014, 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 the 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 our call today we will 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 Chief Executive Officer.

Thanks, Sylvia, and good afternoon. And thanks to all of you for taking time to listen to our third quarter earnings call.

The third quarter was volatility and challenging for all asset managers with indiscriminate selling across all market segments. As we sit here today with markets at much higher levels it appears that the sell-off was part of a normal correction and so far has merely represented a good buying opportunity.

Before we discussed performance and distribution trends across our business, I'm pleased to announce the dividend increase of 14%. Our dividend now stands at an annual rate of $2.28, representing a dividend yield of 4% at yesterday's closing price.

Our balance sheet remained solid with over $80 million in cash and liquid investments, and no debt. Consistent with our stated goal 13 years ago of becoming a superior dividend grower, we have raised our dividend every year since we have been public.

In fact, nearly 50% of the total return in Westwood has come from dividends. Our compound annual growth rate of our quarterly dividend since inception has been nearly 29% and we’ve paid out over $127 million to shareholders as a public company.

Turning now to our investment teams, I will start with the Dallas-based U.S. value team.

As I discussed in my opening remarks, the third quarter was a challenging period for investors and asset managers like, both U.S. and international equity markets posted their worst quarterly performance since the third quarter of 2011, with the S&P 500 Index declining nearly 7%.

Most of the weakness came in August, as an unexpected devaluation in China's currency and concerns over global growth continued or contributed to the sell-off and risk assets and a sharp spike in market volatility. Commodities remained under pressure as crude oil prices declined over 25% in the quarter, pressuring energy and energy-related assets such as MLPs, with the Alerian MLP Index falling more than 23%, the worst quarterly performance in the history of the index which dates back to 1996.

Relative returns for the quarter were mix with our Large, Small and AllCap Value strategies performing ahead or in line with the benchmark. On a year-to-date basis, our U.S.

value equity strategies continued to perform well on a relative basis with each strategy ahead of its respective benchmark and all ranking in the top half of their peer group. Importantly, our value equity strategies have demonstrated stock-picking skill by protecting the downside in an environment where our customers really need this.

Westwood’s multi-asset strategies including income opportunity saw declines for the quarter but continued to exhibit lower volatility profiles. Westwood’s more than decade-long history, the income opportunity strategy has proven the ability to deliver an attractive longer term risk reward profile in an area of continued high demand from investors.

As noted earlier, MLPs were by far the most challenged U.S. asset class in the third quarter and our strategy was no exception, posting a decline of 26% for the period.

We felt at the time that the correction was far too severe and we took advantage of the opportunity to buy high-quality names at very attractive prices. So far that’s proven to be a winning strategy as we have seen a nice rebound in October.

Turning now to our Toronto-based global and emerging markets equity team, their perspective on the quarter was better with the combination of already nervous market participants who were further spooked by the relative small devaluation of the Chinese currency and disappointing trade and economic data from China. While the quarter was going well up to this point, the Fed’s decision not to increase interest rates led to further selling and REM product ended the quarter slightly behind our benchmark.

As with our MLP team, the emerging market team is focused on the long-term fundamentals of companies and as such took advantage of the volatility by adding to existing holdings as well as adding some new names to the portfolios that reach compelling bio levels. Overtime as we all know, emerging markets have endured balance of large underperformance relative to the developed markets.

These periods have historically provided attractive entry points for our investors. The U.S.

dollar has strengthened considerably in recent years and that’s provided a strong headwind to U.S. investors in emerging markets, which we do not expect to be a significant tractor in the years ahead.

It’s been four years since we hired our Boston base Global Convertible Securities team and sharp contrast to the FX endured by our equity strategies. The strategies managed by our Global Convertible Securities team held up extremely well over the quarter.

The absolute return focused market neutral income strategy posted a positive absolute return. And the strategic global convertible strategy was down less than 4%, just an approximate 40% participation rate with the MSCI world equity index.

After the end of the third quarter, our advisory mandate for the European-based Aviva Global Convertibles Absolute Return Fund moved to delegated status. While there is no change to our revenue realization from this account, this will result in approximately $330 million of assets which were classified as assets under advisement as of September 30th, moving now to assets under management in the fourth quarter.

Turning now to distribution. I’ll start with comments on the institutional business which is our largest channel segment.

In line with the broader industry, we've suffered the headwind of a continued rebalancing away from U.S. equity.

This has been driven not only by investors looking to invest in another asset classes but also by the outperformance of U.S. equities.

It’s typically institutional investors will rebalance their asset allocation back to target ratings. However, it's important that I emphasize that the outflows we have seen have generally been partial redemptions and not a loss of client relationships.

In fact, our institutional business client retention rate has exceeded 95% on a year-to-date basis. From a new business perspective, we believe the recent market volatility has resulted in a delay in decision-making for many investors.

We noticed this in particular in relation to two final presentations we made for $100 to $150 million emerging markets mandates during the quarter where the decision to invest was deferred by the institution. We expect these delays to be temporary and we hope to see decision by these institutions in the fourth quarter or early next year.

As we look forward, we believe that the continued strong performance over both short-term and long-term periods of our established small cap value, all-cap value and income opportunity strategies as well as the strong initial performance of our new strategies has put us in a strong competitive position. Of the newer strategies, our concentrated large cap value strategy is the best performing large-cap value strategy in the investment database, the most widely used screening database for institutional investors since the strategies inception nearly two years ago.

As we look to the end of the year, we expect to see the funding of new mandates on our small-cap value, strategic global convertible and emerging market strategies during the fourth quarter. In addition, the pipeline remains quite strong and we continue to accurately represent our broad capabilities to investors around the world.

Turning next to private wealth, new business development efforts across Dallas, Omaha and Houston and prospecting activity levels remain high despite the typical seasonal slowdown associated with the summer months. As we look forward to the fall, our support of local non-profit organizations and the opportunity to get in front of many prospective clients insured event sponsored by Westwood Trust picks up significantly.

We also have speakers and events scheduled for all three offices for existing clients and prospects over the next few weeks in Dallas, Omaha and Houston, which has historically been a great avenue to build sales momentum into the New Year. As we continue to look to improve the client experience, the Dallas and Omaha offices will be converting to the FIS trust accounting platform at the end of this year.

Clients will benefit from a vastly improved online experience as well as enhance statements and reporting. Since closing the Woodway Financial Advisors acquisition on April 1, we worked diligently to integrate them into Westwood.

We are proud to have Woodway as the Houston office of Westwood Trust which is now known as Woodway Financial Advisors, a Westwood Trust Company. Houston is a strong and growing private wealth market.

And Woodway is well positioned as the premier private wealth firm in Houston. We continue to actively evaluate opportunities to expand our company through the acquisition of private wealth companies in strong geographic markets.

We feel that our private wealth business is a strong diversifier of our overall company as our superior client service efforts have led to long-term customers and relationships with exceptionally high client retention rates. As we discussed on our last earnings call, our mutual fund complex has grown to 15 funds.

We’ve seen the Morningstar ratings of some of our funds increased during the year with the small cap value fund now at five stars. In addition, we now have funds in non-equity Morningstar categories, including world allocation and market neutral.

In fact, the market neutral income fund which we launched on May 1st has started with very encouraging performance, including positive returns in August during the height of the market volatility. This has copy attention of some inventors and even resulted in a West Coast-based RIA investing in the fund during the first week of October.

We believe this fund is an attractive offering as a sleeve or discretion model looking to construct an overall portfolio that includes low volatility for liquid alternative funds. We will continue to work hard to find new investors and remain positive in our efforts to position this fund as a truly differentiated strategy in the marketplace.

From a business development perspective we hired Jonathan Dale as our first National Accounts Director to engage in an increased marketing effort of our mutual funds and separately manage accounts to financial institutions such as national broker/dealers, mutual fund platforms, defined contribution platforms and trust companies. The intent is that since the number of our mutual funds are new and have short mutual fund track records but have longer tenured institutional track records, we are seeking to market these funds to those investors that control discretionary model.

Discretionary model investors perform their due diligence on Westwood as an asset manager and are not tied to solely analyzing the record of the mutual fund itself. From a sub-advisory perspective our existing partnerships remain strong and we continue to seek opportunities to establish new partnership with firms across a number of our strategies.

Before we wrap up, I would like to revisit the future growth potential of our company from a broader perspective. We believe that our primary mission is to deliver superior investment performance and an exceptional client service experience that exceeds our client's expectations.

We will continue this focus and as always do it within a framework of how we think about asset allocation trends in the marketplace and the types of strategies we want to offer investors. Many of you will remember that Westwood started as a single investment team with the single strategy and today we have 10 strategies each with over $300 million in assets under management.

We offer close to 20 institutional strategies and 15 mutual funds. We started the UCITS fund less than two years ago and we have three UCITS funds now that allow us to expand accessibility to Westwood for non-US investors.

Over the past two years, we've started seven new strategies in areas that we believe are relevant to investors. These include high conviction or concentrated equity strategies, low volatility strategies, global multi-asset strategies and liquid alternative strategies.

We believe that all of these strategies will provide us with additional growth engines as we move forward. Furthermore we will continue to look at ways to build these strategies that benefit from the core competencies of our existing teams and also look at inorganic opportunities to add new investment talent to our company.

We believe the strength of our investment capabilities allied to our strong client retention rates and the increased breadth of our distribution positions us well for the future. We’ve seen a nice recovery since the end of the third quarter and with the Aviva transfer and some new accounts, we estimate assets under management to be just shy of $22 billion as of last Friday.

With that, I’d like to thank you for your continued interest in Westwood and turn the call over to Tiffany Kice, our CFO.

Thanks, Brian, and good afternoon, everyone. For the third quarter of 2015, we are reporting total revenues of $32.5 million, up 15% or $4.4 million from the same period in 2014.

Asset-based advisory fees are up 9% or $2.1 million and trust fees are up 51% or $2.7 million. Our trust fees include revenue generated by Woodway which we acquired on April 1 of the current year.

Net income of $7 million was relatively flat with the third quarter of 2014, while diluted earnings per share of $0.87 decreased slightly from $0.92 per share in the same period of 2014. Shares issued are contingently attributable in relation to the Woodway acquisition contributed $0.02 of the decreased diluted EPS.

Economic earnings and non-GAAP metric of $12.4 million increased 14% as compared to $10.9 million in the third quarter of 2014. Economic earnings per share increased to $1.55 per share or $0.41 per share in the same period of 2014.

Firm wide assets under management decreased to $20.4 billion primarily due to the overall decline in global markets during the third quarter. At quarter end, our assets under management consisted of institutional assets of $11.3 billion or 55% of the total, private wealth assets of $5.3 billion or 26% of the total, mutual fund assets of $3.8 billion or 19% of the total.

Our balance sheet continues to be very strong. We currently have cash and investments of $80 million and no debt.

Our Board of Directors approved a quarterly cash dividend of $0.57 per common share, an increase of 14% from the previous quarterly dividend rate payable on January 4, 2016, the stockholders on record on December 15, 2015. This represents an annualized dividend yield of 4% at yesterday’s closing price.

We encourage you to review the presentation we posted on our website reflecting third quarter highlight as well as longer-term trends and the growth of our assets under management, revenues, earnings and dividend. I will now turn the call back over to Brian to conclude.

Thanks, Tiffany. If anybody has any questions, you can ask them now.

Thank you.

That’s Mac Sykes from Gabelli. But thank you for taking my questions and congratulations on the October today at AUM.

I have just two questions. First, on the AUA move to AUM, can I assume the revenue and margin impact will change accordingly?

No. As I said, maybe not clearly with that, there will be no revenue impact.

It simply moving the assets under advisement to assets under management. I will say though that the performance of the fund has been really, really good.

And the sales team at Aviva has spend a lot of time with our guys and they were in fact -- they were there as recent as last week, outselling the fund and having some good success.

And then what sort of distribution channels are you targeting for the concentrated value product at this point?

I think it will still be home based for us which is the institutional consulting community. They know as well and they have said for years now that they have a preference for high active share managers.

And in our case, if you look across our spectrum of equity products, we have a very high active share in access of 75% most cases. So we think this will be well received.

We got to get our three year record behind us. We’re nearly two years into it and the numbers have been spectacular.

And just to elaborate a little bit further on that, this is not a different product from the standpoint of having a completely different set of stocks. This is a subset of our traditional large cap value product, which would have historically 45 names.

In this product, we have 25 names. And this 25 are simply higher conviction weightings of the 45 names that we have in the traditional product.

Great. Thank you.

And congrats on the dividend. I’m sure the investors will appreciate that.

Great. Thanks, Mac.

Appreciate your question.

Good afternoon, Brian, Tiffany. And this is another investor that very much appreciates that dividend.

So thank you very much.

All right. Terrific.

And you commented that you have 95% client retention year-to-date if I understood that correctly, have you looked at our metric the one previous periods of market volatility or is there any industry benchmark? It seems like very impressive number?

Yeah. So let me be clear on the difference between client retention rate and a redemption rate.

A client retention rate means that you have retained the client and we have retained in excess of 95% of the clients we had at the beginning of the year, we still have them. And I would say that in industry rate is closer to 90% or less.

So we have enjoyed over a long period of time a very high client retention rate. As far as redemption rate goes, that’s the amount of money that leaves the complex and you have a natural rate of redemption in any one of your categories.

So, for example, in the trust area, you have people who have saved money and eventually they have to leave of to that money, so you are going to see a natural rate of redemption there. Pension funds that you manage money for have to pay their benefits to their pensioners, so you’ll see a natural amount of money leave there.

And endowments and foundations typically have a 5% spend rate, so you see some money go after door there. We did a study of industry-wide redemption rates over the last three years and that number is an excess of 23% and our number is well below 20%.

So redemption and client retention are two different things, but I appreciate your question, hopefully that clarifies it.

That clarifies us very well. Certainly impressive numbers and Brian, could you just maybe comment a little more on the Woodway acquisition?

How did it turnout in terms of personnel and client retention and what are your strategies for growth there?

Sure. Well, I think, we’re still all very much in the honeymoon stage.

We’re so happy to have them as part of Westwood and the clients have embraced the greater depth of resource that we may bring to the table and the fact that we’re not going to come in and try to change things right away. So those two things are going well for us.

As far as growth goes, we are actively looking for at least one probably two folks to join Woodway in a trust officer position or new business development position. The market is quite hot right now and it’s important to us that we find somebody that is really good fit culturally.

But that is fine, it is in the hands of the recruiters right now and they’re actively looking for some people.

Okay. Great.

Well, thank you very much. And we appreciate the great results and thanks again for the dividend.

Okay. Larry, thanks for your call.

I appreciate your question.

Great. Thank you.

Great. Well, thank you very much.

We appreciate everyone support of Westwood. Many of you over a long period of time and we’re always here and available to answer the questions, so please give us call or go to out website westwoodgroup.com.

Thanks again for your time.