amk-ex991_34.htm

EX-99.1 2 amk-ex991_34.htm EX-99.1 amk-ex991_34.htm

Exhibit 99.1

AssetMark Reports $84.6B Platform Assets for Second Quarter 2021

CONCORD, Calif., July 28, 2021 (GLOBE NEWSWIRE) — AssetMark Financial Holdings, Inc. (NYSE: AMK) today announced financial results for the quarter ended June 30, 2021.

Second Quarter 2021 Financial and Operational Highlights

•	Net income for the quarter was $10.0 million, or $0.14 per share.

•	Adjusted net income for the quarter was $26.6 million, or $0.36 per share, on total revenue of $128.0 million.

•	Adjusted EBITDA for the quarter was $40.0 million, or 31.3% of total revenue.

•	Platform assets increased 33.8% year-over-year and 7.2% quarter-over-quarter to $84.6 billion, aided by quarterly record net flows of $2.2 billion and market impact net of fees of $3.5 billion. Year-to-date annualized net flows as a percentage of beginning-of-year platform assets were 11.2%.

•	More than 5,500 new households and 201 new producing advisors joined the AssetMark platform during the second quarter. In total, as of June 30, 2021 there were over 8,400 advisors (approximately 2,700 were engaged advisors) and over 196,400 investor households on the AssetMark platform.

•	We realized a 26.6% annualized production lift from existing advisors for the second quarter, indicating that advisors continued to grow organically and increase wallet share on our platform.

“Our reframed growth strategy is starting to resonate with advisors, as evidenced by record results, greater share of wallet capture and record advisor satisfaction scores,” said AssetMark CEO Natalie Wolfsen. “We realized record net flows, revenue, adjusted EBITDA, adjusted net income and adjusted EPS in the second quarter. The enhancements we have made to our platform and the deep relationships we have built with our advisors continue to pay dividends. The first half of the year has been outstanding, and I am excited to deliver what we have planned for advisors in the second half of 2021.”

Second Quarter 2021 Key Operating Metrics

	2Q21			2Q20			Variance per year
Operational metrics:
Platform assets (at period-beginning) (millions of dollars)		78,880			56,025			40.8	%
Net flows (millions of dollars)		2,228			907			145.6	%
Market impact net of fees (millions of dollars)		3,487			6,297			(44.6	%)
Acquisition impact (millions of dollars)	-			-			NM
Platform assets (at period-end) (millions of dollars)		84,594			63,229			33.8	%
Net flows lift (% of beginning of year platform assets)		3.0	%		1.5	%	150 bps
Advisors (at period-end)		8,496			8,474			0.3	%
Engaged advisors (at period-end)		2,691			2,327			15.6	%
Assets from engaged advisors (at period-end) (millions of dollars)		77,352			56,095			37.9	%
Households (at period-end)		196,474			179,166			9.7	%
New producing advisors		201			178			12.9	%
Production lift from existing advisors (annualized %)		26.6	%		16.3	%		63.3	%
Assets in custody at ATC (at period-end) (millions of dollars)		63,394			44,455			42.6	%
ATC client cash (at period-end) (millions of dollars)		2,590			2,960			(12.5	%)

Financial metrics:
Total revenue (millions of dollars)		128			99			29.2	%
Net income (loss) (millions of dollars)		10.0			(9.3	)	NM
Net income (loss) margin (%)		7.8	%		(9.4	%)	1720 bps
Capital expenditure (millions of dollars)		9.2			6.2			47.0	%

Non-GAAP financial metrics:
Adjusted EBITDA (millions of dollars)		40.0			25.3			58.1	%
Adjusted EBITDA margin (%)		31.3	%		25.6	%	570 bps
Adjusted net income (millions of dollars)		26.6			15.1			75.4	%
Note: Percentage variance based on actual numbers, not rounded results

Webcast and Conference Call Information

AssetMark will host a live conference call and webcast to discuss its second quarter 2021 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: July 28, 2021

•	Time: 2:00 p.m. PT; 5:00 p.m. ET

•

Phone: Listeners can pre-register for the conference call here: ~~http://www.directeventreg.com/registration/event/9481925~~. 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 July 28, 2021.

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 $84.6 billion in platform assets as of June 30, 2021 and has a history of innovation spanning more than 20 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 “may,” “will,” “should,” “believes,” “predicts,” “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 growth strategy, our financial performance, investments in new products, services and capabilities and general market, political, 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 prospectus dated July 17, 2019 filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended, and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, which is expected to be filled on August 6, 2021. Additional information is also available in our Annual Report on Form 10-K for the year ended December 31, 2020, which is on file with the Securities and Exchange Commission and available on our investor relations website at http://ir.assetmark.com. 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.

Condensed Consolidated Balance Sheets

(in thousands except share data and par value)

	June 30, 2021		December 31, 2020
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	179,756	$	70,619
Restricted cash		11,000		11,000
Investments, at fair value		13,496		10,577
Fees and other receivables, net		7,745		8,891
Income tax receivable, net		12,979		8,596
Prepaid expenses and other current assets		12,926		13,637
Total current assets		237,902		123,320
Property, plant and equipment, net		7,793		7,388
Capitalized software, net		70,667		68,835
Other intangible assets, net		652,835		655,736
Operating lease right-of-use assets		23,648		27,496
Goodwill		338,848		338,848
Other assets		2,199		1,965
Total assets	$	1,333,892	$	1,223,588
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,007	$	2,199
Accrued liabilities and other current liabilities		39,423		43,694
Total current liabilities		40,430		45,893
Long-term debt, net		150,000		75,000
Other long-term liabilities		17,763		16,302
Long-term portion of operating lease liabilities		29,725		31,820
Deferred income tax liabilities, net		149,726		149,500
Total long-term liabilities		347,214		272,622
Total liabilities		387,644		318,515
Commitments and contingencies		—		—
Stockholders’ equity:
Common stock, $0.001 par value (675,000,000 shares authorized and 72,540,664 and 72,459,255 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively)		73		72
Additional paid-in capital		890,534		850,430
Retained earnings		55,641		54,571
Total stockholders’ equity		946,248		905,073
Total liabilities and stockholders’ equity	$	1,333,892	$	1,223,588

AssetMark Financial Holdings, Inc.

Unaudited Condensed Consolidated Statements of Income and Comprehensive Income

(in thousands, except share and per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenue:
Asset-based revenue	$	124,690		$	94,712		$	240,503		$	200,362
Spread-based revenue		2,672			3,549			5,278			11,500
Other revenue		680			870			1,267			2,159
Total revenue		128,042			99,131			247,048			214,021
Operating expenses:
Asset-based expenses		35,818			30,084			71,912			65,099
Spread-based expenses		868			433			1,544			1,722
Employee compensation		39,447			45,364			106,749			88,861
General and operating expenses		16,316			13,383			33,805			32,748
Professional fees		5,018			3,160			9,278			6,991
Depreciation and amortization		9,730			8,747			19,201			17,156
Total operating expenses		107,197			101,171			242,489			212,577
Interest expense		774			1,474			1,545			3,101
Other expense, net		(22	)		(39	)		(37	)		11
Income (loss) before income taxes		20,093			(3,475	)		3,051			(1,668	)
Provision for income taxes		10,107			5,805			1,981			4,876
Net income (loss)		9,986			(9,280	)		1,070			(6,544	)
Net comprehensive income (loss)	$	9,986		$	(9,280	)	$	1,070		$	(6,544	)
Net income (loss) per share attributable to common stockholders:
Basic	$	0.14		$	(0.14	)	$	0.02		$	(0.10	)
Diluted		0.14			(0.14	)		0.02			(0.10	)
Weighted average number of common shares outstanding, basic		71,922,179			67,208,746			71,176,386			67,175,603
Weighted average number of common shares outstanding, diluted		72,155,068			67,208,746			71,231,337			67,175,603

AssetMark Financial Holdings, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

	Six Months Ended June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	1,070		$	(6,544	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		19,201			17,156
Interest		370			158
Deferred income taxes		226			593
Share-based compensation		40,104			27,122
Changes in certain assets and liabilities:
Fees and other receivables, net		47			1,333
Receivables from related party		(43	)		—
Prepaid expenses and other current assets		1,913			2,550
Accounts payable, accrued liabilities and other current liabilities		(5,220	)		(15,072	)
Income tax receivable, net		(4,383	)		2,208
Net cash provided by operating activities		53,285			29,504
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of WBI OBS Financial, LLC, net of cash received		—			(18,561	)
Purchase of investments		(1,927	)		(1,497	)
Sale of investments		174			5
Purchase of property and equipment		(421	)		(704	)
Purchase of computer software		(16,974	)		(12,004	)
Net cash used in investing activities		(19,148	)		(32,761	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from credit facility draw down		75,000			—
Net cash provided by financing activities		75,000			—
Net change in cash, cash equivalents, and restricted cash		109,137			(3,257	)
Cash, cash equivalents, and restricted cash at beginning of period		81,619			105,341
Cash, cash equivalents, and restricted cash at end of period	$	190,756		$	102,084
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid	$	7,672		$	2,674
Interest paid	$	985		$	2,939
Non-cash operating activities:
Non-cash changes to right-of-use assets	$	(2,140	)	$	38,495
Non-cash changes to lease liabilities	$	(2,140	)	$	39,839

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; and

•

costs 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; and

•

as 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; and

•

the 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 ended June 30, 2021 and 2020 (unaudited).

	Three Months Ended June 30,						Three Months Ended June 30,
(in thousands except for percentages)	2021			2020			2021			2020
Net income (loss)	$	9,986		$	(9,280	)		7.8	%		(9.4	)%
Provision for income taxes		10,107			5,805			7.9	%		5.9	%
Interest income		(73	)		(249	)		(0.1	)%		(0.3	)%
Interest expense		774			1,474			0.6	%		1.5	%
Amortization/depreciation		9,730			8,747			7.6	%		8.9	%
EBITDA		30,524			6,497			23.8	%		6.6	%
Share-based compensation⁽¹⁾		6,676			13,934			5.2	%		14.0	%
Reorganization and integration costs⁽²⁾		1,283			44			1.0	%		0.0	%
Acquisition expenses⁽³⁾		1,471			3,648			1.2	%		3.7	%
Business continuity plan⁽⁴⁾		61			1,245			0.1	%		1.3	%
Office closures⁽⁵⁾		46			—			0.0	%		—
Other expenses		(22	)		(39	)		(0.0	)%		—
Adjusted EBITDA	$	40,039		$	25,329			31.3	%		25.6	%

	Six Months Ended June 30,						Six Months Ended June 30,
(in thousands except for percentages)	2021			2020			2021			2020
Net income (loss)	$	1,070		$	(6,544	)		0.4	%		(3.1	)%
Provision for income taxes		1,981			4,876			0.8	%		2.3	%
Interest income		(98	)		(731	)		(0.0	)%		(0.3	)%
Interest expense		1,545			3,101			0.6	%		1.4	%
Amortization/depreciation		19,201			17,156			7.8	%		8.0	%
EBITDA		23,699			17,858			9.6	%		8.3	%
Share-based compensation⁽¹⁾		40,104			27,122			16.2	%		12.7	%
Reorganization and integration costs⁽²⁾		5,779			147			2.3	%		0.1	%
Acquisition expenses⁽³⁾		4,288			7,225			1.7	%		3.4	%
Business continuity plan⁽⁴⁾		132			1,341			0.1	%		0.6	%
Office closures⁽⁵⁾		167			—			0.1	%		—
Other expenses		(37	)		11			(0	)		—
Adjusted EBITDA	$	74,132		$	53,704			30.0	%		25.1	%

(1)

“Share-based compensation” represents granted share-based compensation in the form of Class C Common Units (which are incentive units) of AssetMark Holdings LLC, our former parent company, and 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 the departure of our former chief executive officer in March 2021, 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 operations while transitioning to a remote workforce 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 for the three months ended June 30, 2021 and 2020, broken out by compensation and non-compensation expenses (unaudited).

	Three Months Ended June 30, 2021									Three Months Ended June 30, 2020
(in thousands)	Compensation			Non- Compensation			Total			Compensation			Non- Compensation			Total
Share-based compensation⁽¹⁾	$	6,676		$	—		$	6,676		$	13,934		$	—		$	13,934
Reorganization and integration costs⁽²⁾		726			557			1,283			44			—			44
Acquisition expenses⁽³⁾		509			962			1,471			2,318			1,330			3,648
Business continuity plan⁽⁴⁾		12			49			61			986			259			1,245
Office closures⁽⁵⁾		—			46			46			—			—			—
Other expenses		—			(22	)		(22	)		—			(39	)		(39	)
Total adjustments to adjusted EBITDA	$	7,923		$	1,592		$	9,515		$	17,282		$	1,550		$	18,832

	Three Months Ended June 30, 2021									Three Months Ended June 30, 2020
(in percentages)	Compensation			Non- Compensation			Total			Compensation			Non- Compensation			Total
Share-based compensation⁽¹⁾		5.2	%		—			5.2	%		14.0	%		—			14.0	%
Reorganization and integration costs⁽²⁾		0.6	%		0.4	%		1.0	%		—			—			—
Acquisition expenses⁽³⁾		0.4	%		0.7	%		1.1	%		2.4	%		1.3	%		3.7	%
Business continuity plan⁽⁴⁾		0.0	%		—			0.0	%		1.0	%		0.3	%		1.3	%
Office closures⁽⁵⁾		—			—			—			—			—			—
Other expenses		—			—			—			—			—			—
Total adjustments to adjusted EBITDA margin %		6.2	%		1.1	%		7.3	%		17.4	%		1.6	%		19.0	%

(1)

(2)

(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 operations while transitioning to a remote workforce and other costs due to the COVID-19 pandemic.

(5)	“Office closures” represents one-time expenses related to closing facilities.

	Six Months Ended June 30, 2021									Six Months Ended June 30, 2020
(in thousands)	Compensation			Non- Compensation			Total			Compensation			Non- Compensation			Total
Share-based compensation⁽¹⁾	$	40,104		$	—		$	40,104		$	27,122		$	—		$	27,122
Reorganization and integration costs⁽²⁾		2,933			2,846			5,779			149			(2	)		147
Acquisition expenses⁽³⁾		1,225			3,063			4,288			3,450			3,775			7,225
Business continuity plan⁽⁴⁾		12			120			132			1,082			259			1,341
Office closures⁽⁵⁾		—			167			167			—			—			—
Other expenses		—			(37	)		(37	)		—			11			11
Total adjustments to adjusted EBITDA	$	44,274		$	6,159		$	50,433		$	31,803		$	4,043		$	35,846

	Six Months Ended June 30, 2021									Six Months Ended June 30, 2020
(in percentages)	Compensation			Non- Compensation			Total			Compensation			Non- Compensation			Total
Share-based compensation⁽¹⁾		16.2	%		—			16.2	%		12.7	%		—			12.7	%
Reorganization and integration costs⁽²⁾		1.2	%		1.2	%		2.4	%		0.1	%		—			0.1	%
Acquisition expenses⁽³⁾		0.5	%		1.2	%		1.7	%		1.6	%		1.8	%		3.4	%
Business continuity plan⁽⁴⁾		0.0	%		0.0	%		0.0	%		0.5	%		0.1	%		0.6	%
Office closures⁽⁵⁾		—			0.1	%		0.1	%		—			—			—
Other expenses		—			0.0	%		0.0	%		—			—			—
Total adjustments to adjusted EBITDA margin %		17.9	%		2.5	%		20.4	%		14.9	%		1.9	%		16.8	%

(1)

(2)

(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 operations while transitioning to a remote workforce 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:

•

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; and

•

amortization 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:

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adjusted net income does not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;

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adjusted net income does not reflect changes in, or cash requirements for, working capital needs; and

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other companies in the financial services industry may calculate adjusted net income differently than we do, limiting its usefulness as a comparative measure.

Set forth below is a reconciliation from net income, the most directly comparable GAAP financial measure, to adjusted net income for the three months ended June 30, 2021 and 2020 (unaudited).

	Three Months Ended June 30, 2021									Three Months Ended June 30, 2020
(in thousands)	Compensation			Non- Compensation			Total			Compensation			Non- Compensation			Total
Net income (loss)							$	9,986								$	(9,280	)
Acquisition-related amortization⁽¹⁾	$	—		$	5,108			5,108		$	—		$	5,108			5,108
Expense adjustments⁽²⁾		1,248			1,613			2,861			3,348			1,589			4,937
Share-based compensation		6,676			—			6,676			13,934			—			13,934
Other expenses		—			(22	)		(22	)		—			(39	)		(39	)
Tax effect of adjustments⁽³⁾		(293	)		2,242			1,949			(870	)		1,354			484
Adjusted net income	$	7,631		$	8,941		$	26,558		$	16,412		$	8,012		$	15,144

	Six Months Ended June 30, 2021									Six Months Ended June 30, 2020
(in thousands)	Compensation			Non- Compensation			Total			Compensation			Non- Compensation			Total
Net income (loss)							$	1,070								$	(6,544	)
Acquisition-related amortization⁽¹⁾	$	—		$	10,216			10,216		$	—		$	10,216			10,216
Expense adjustments⁽²⁾		4,170			6,196			10,366			4,680			4,032			8,712
Share-based compensation		40,104			—			40,104			27,122			—			27,122
Other expenses		—			(37	)		(37	)		—			11			11
Tax effect of adjustments⁽³⁾		(980	)		(12,009	)		(12,989	)		(1,217	)		(5,449	)		(6,666	)
Adjusted net income	$	43,294		$	4,366		$	48,730		$	30,585		$	8,810		$	32,851

(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)	Reflects the tax impact of expense adjustments and acquisition-related amortization.

Contacts

Investors:

Taylor J. Hamilton, CFA

Head of Investor Relations

~~InvestorRelations@assetmark.com~~

Media:

Alaina Kleinman

Head of PR & Communications

~~alaina.kleinman@assetmark.com~~

SOURCE: AssetMark Financial Holdings, Inc.