GAMCO Investors, Inc. Reports Results for the Second Quarter 2023
· *Second Quarter Fully Diluted EPS was $0.58 versus $0.62 for First Quarter 2023*
· *Operating margin of 27.9%*
· *Ending AUM of $30.7 billion; average AUM of $30.2 billion*GREENWICH, Conn., Aug. 08, 2023 (GLOBE NEWSWIRE) -- GAMCO Investors, Inc. (“GAMI”) (OTCQX: GAMI) today reported its operating results for the quarter ended June 30, 2023.
*Financial Highlights*
(In thousands, except percentages and per share data) *Three Months Ended**
* *June 30,
2023**
* *March 31,
2023**
* *$ Change* *% Change*
*U.S. GAAP*
Revenue $ 59,171 $ 59,906 $ (735 ) -1.2 %
Expenses $ 42,679 $ 43,508 $ (829 ) -1.9 %
Operating income $ 16,492 $ 16,398 $ 94 0.6 %
Non-operating income (loss) $ 3,281 $ 1,924 $ 1,357 70.5 %
Net income $ 14,613 $ 15,897 $ (1,284 ) -8.1 %
Diluted earnings per share $ 0.58 $ 0.62 $ (0.04 ) -6.5 %
Operating margin 27.9% 27.4% N/A 50 bps
*Revenue*
(In thousands) *Three Months Ended* *June 30,
2023* *March 31,
2023* *$ Change* *% Change*
Investment advisory and incentive fees
Fund revenues $ 37,480 $ 37,467 $ 13 0.0 %
Institutional and Private Wealth Management $ 15,222 $ 15,337 $ (115 ) -0.7 %
SICAV $ 1,704 $ 2,191 $ (487 ) -22.2 %
Total $ 54,406 $ 54,995 $ (589 ) -1.1 %
Distribution fees and other income $ 4,765 $ 4,911 $ (146 ) -3.0 %
Total revenue $ 59,171 $ 59,906 $ (735 ) -1.2 %
· The decrease in total investment advisory and incentive fees from the first quarter 2023 was primarily due to lower average equity assets under management across all three types of investment vehicles.*Expenses*
(In thousands) *Three Months Ended* *June 30,
2023* *March 31,
2023* *$ Change* *% Change*
Compensation $ 28,056 $ 29,186 $ (1,130 ) -3.9 %
Management fee $ 2,197 $ 2,036 $ 161 7.9 %
Distribution costs $ 6,369 $ 6,473 $ (104 ) -1.6 %
Other operating expenses $ 6,057 $ 5,813 $ 244 4.2 %
Total expenses $ 42,679 $ 43,508 $ (829 ) -1.9 %
· Compensation decreased from the first quarter of 2023, primarily due to lower stock compensation of $0.8 million and lower variable compensation of $0.4 million, partially offset by higher salaries of $0.1 million;
· Management fee increased from the first quarter of 2023 by $0.2 million, as pre-management fee income increased by $1.6 million;
· Distribution costs decreased from the first quarter of 2023, primarily due to lower average assets under management in open-end funds; and
· Other operating expenses increased from the first quarter of 2023, primarily due to higher meeting expenses of $0.3 million.
*Operating Margin*
Operating margin was 27.9% for the second quarter of 2023, compared with 27.4% for the first quarter of 2023. Operating margin represents the ratio of operating income to revenue.
*Non-Operating Income *
(In thousands) *Three Months Ended* *June 30,
2023* *March 31,
2023* *$ Change* *% Change*
Gain / (loss) from investments, net $ 1,616 $ 561 $ 1,055 188.1 %
Interest and dividend income $ 1,958 $ 1,661 $ 297 17.9 %
Interest expense $ (293 ) $ (298 ) $ 5 -1.7 %
Total non-operating income / (loss) $ 3,281 $ 1,924 $ 1,357 70.5 %
*Income Taxes*A reconciliation of the company’s statutory federal income tax rate and the effective income tax rate is summarized in the following table:
*Three Months Ended* *June 30,
2023* *March 31,
2023*
U.S. statutory tax rate 21.0 % 21.0 %
State income tax, net of federal benefit 2.7 2.1
Other 2.4 (9.9 )
Effective income tax rate 26.1 % 13.2 %
*Assets Under Management*
(In millions) *As of* *June 30,
2023* *March 31,
2023* *% Change*
Mutual Funds $ 8,271 $ 8,288 -0.2 %
Closed-end Funds 7,195 7,155 0.6 %
Institutional & PWM (a) (b) 11,035 10,764 2.5 %
SICAV (c) 590 824 -28.4 %
Total Equities 27,091 27,031 0.2 %
100% U.S. Treasury Money Market Fund 3,596 3,609 -0.4 %
Institutional & PWM Fixed Income 32 32 0.0 %
Total Treasuries & Fixed Income 3,628 3,641 -0.4 %
Total Assets Under Management $ 30,719 $ 30,672 0.2 %
(a) Includes $441 and $460 of AUM subadvised for Teton Advisors, Inc. at June 30, 2023 and March 31, 2023, respectively.
(b) Includes $230 and $224 of 100% U.S. Treasury Fund AUM at June 30, 2023 and March 31, 2023, respectively.
(c) Includes $579 and $812 of the SICAV AUM subadvised by Associated Capital Group, Inc. at June 30, 2023 and March 31, 2023, respectively.
Assets under management at June 30, 2023 were $30.7 billion, unchanged from $30.7 billion at March 31, 2023. Market appreciation of $966 million was offset by net outflows of $787 million and distributions of $132 million.*Mutual Funds*
Assets under management in Mutual Funds at June 30, 2023 were $8.3 billion, unchanged from March 31, 2023. The details of the quarterly change were as follows:
· Net outflows were $255 million;
· Market appreciation was $242 million; and
· Distributions, net of reinvestment, were $4 million.*Closed-end Funds*
Assets under management in Closed-end Funds at June 30, 2023 were $7.2 billion, unchanged from March 31, 2023. The details of the quarterly change were as follows:
· Net outflows were $23 million;
· Market appreciation was $191 million; and
· Distributions, net of reinvestment, were $128 million.*Institutional & PWM*
Assets under management in Institutional & PWM at June 30, 2023 were $11.0 billion, an increase of 2.5% from the $10.8 billion at March 31, 2023. The details of the quarterly change were as follows:
· Net outflows were $231 million; and
· Market appreciation was $502 million.
*SICAV*
Assets under management in SICAV at June 30, 2023 were $0.6 billion, a decrease of 28.4% from the $0.8 billion at March 31, 2023. The details of the quarterly change were as follows:
· Net outflows were $221 million; and
· Market depreciation was $13 million.
*100% U.S. Treasury Money Market Fund*
Assets under management in 100% U.S. Treasury Money Market Fund at June 30, 2023 were $3.6 billion, unchanged from the $3.6 billion at March 31, 2023. The details of the quarterly change were as follows:
· Net outflows were $57 million; and
· Market appreciation was $44 million.
*Balance Sheet Information*
As of June 30, 2023, cash, cash equivalents, and investments were $193.6 million, compared with $169.5 million as of December 31, 2022. As of June 30, 2023, stockholders’ equity was $161.4 million, compared with $139.1 million as of December 31, 2022.
*Return to Shareholders*
During the second quarter, GAMI paid a dividend of $0.04 per share for a total of $1.0 million and purchased 85,834 shares for $1.6 million at an average price of $18.98 per share. From July 1, 2023, to August 8, 2023, the Company has purchased 54,255 shares at an average price of $19.86 per share.
On August 8, 2023, GAMI’s board of directors declared a regular quarterly dividend of $0.04 per share, which is payable on September 26, 2023, to class A and class B shareholders of record on September 12, 2023.
*About GAMCO Investors, Inc.*
GAMI is best known for its research-driven value approach to equity investing (known as PMV with a Catalyst™). GAMI conducts its investment advisory business principally through two subsidiaries: Gabelli Funds, LLC (24 open-end funds, 14 closed-end funds, 5 actively managed semi-transparent ETFs, and a SICAV) and GAMCO Asset Management Inc. (approximately 1,400 institutional and private wealth separate accounts). GAMI serves a broad client base including institutions, intermediaries, private wealth, and direct retail investors. In recent years, GAMI has successfully integrated new teams of RIAs by providing attractive compensation arrangements and extensive research capabilities.
Gabelli Funds offers a wide range of solutions for clients across Value and Growth Equity, SRI, Convertibles, sector-focused strategies including Gold and Utilities, Merger Arbitrage, and U.S. Treasury Money Market Fixed Income.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Our disclosure and analysis in this press release, which do not present historical information, contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements convey our current expectations or forecasts of future events. You can identify these statements because they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning. They also appear in any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance of our products, expenses, the outcome of any legal proceedings, and financial results. Although we believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know about our business and operations, the economy, and other conditions, there can be no assurance that our actual results will not differ materially from what we expect or believe. Therefore, you should proceed with caution in relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance.
Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that are difficult to predict and could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. Some of the factors that may cause our actual results to differ from our expectations include risks associated with the duration and scope of the ongoing coronavirus pandemic resulting in volatile market conditions, a decline in the securities markets that adversely affect our assets under management, negative performance of our products, the failure to perform as required under our investment management agreements, and a general downturn in the economy that negatively impacts our operations. We also direct your attention to the more specific discussions of these and other risks, uncertainties and other important factors contained in our Annual Report and other public filings. Other factors that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations whether as a result of new information, future developments or otherwise, except as may be required by law.
Gabelli Funds, LLC is a registered investment adviser with the Securities and Exchange Commission and is a wholly owned subsidiary of GAMCO Investors, Inc. (OTCQX: GAMI).
*Investors should carefully consider the investment objectives, risks, charges and expenses of the Fund before investing. The prospectus, which contains more complete information about this and other matters, should be read carefully before investing. To obtain a prospectus, please call 800 GABELLI or visit **www.gabelli.com*
*GAMCO Investors, Inc. and Subsidiaries*
*Condensed Consolidated Statements of Operations (Unaudited)*
*(in thousands, except per share data)* *Three Months Ended* *% Change From* *June 30,
2023* *March 31,
2023* *June 30,
2022* *March 31,
2023* *June 30,
2022*
*Revenue:*
Investment advisory and incentive fees $ 54,406 $ 54,995 $ 60,248
Distribution fees and other income 4,765 4,911 5,355
Total revenue 59,171 59,906 65,603 -1.2 % -9.8 %
*Expenses:*
Compensation 28,056 29,186 24,215
Management fee 2,197 2,036 365
Distribution costs 6,369 6,473 6,672
Other operating expenses 6,057 5,813 6,086
Total expenses 42,679 43,508 37,338 -1.9 % 14.3 %
*Operating income* 16,492 16,398 28,265 0.6 % -41.7 %
*Non-operating income (loss):*
Gain / (loss) from investments, net 1,616 561 (4,383 )
Interest and dividend income 1,958 1,661 416
Interest expense (293 ) (298 ) (771 )
Total non-operating income / (loss) 3,281 1,924 (4,738 ) 70.5 % -169.2 %
Income before provision for income taxes 19,773 18,322 23,527 7.9 % -16.0 %
Provision for income taxes 5,160 2,425 6,241
Net income $ 14,613 $ 15,897 $ 17,286 -8.1 % -15.5 %
*Earnings per share attributable to common*
*stockholders:*
Basic $ 0.58 $ 0.62 $ 0.66 -7.5 % -13.1 %
Diluted $ 0.58 $ 0.62 $ 0.66 -7.5 % -12.2 %
*Weighted average shares outstanding:*
Basic 25,358 25,529 26,063
Diluted 25,358 25,529 26,323
*GAMCO Investors, Inc. and Subsidiaries*
*Condensed Consolidated Statements of Financial Condition (Unaudited)*
*(in thousands, except per share data)* *June 30,* *December 31,* *June 30,* *2023* *2022* *2022*
*Assets*
Cash, cash equivalents, and U.S. Treasury Bills $ 149,153 $ 66,381 $ 133,890
Investments in securities 21,476 84,742 25,465
Seed capital investments 22,995 18,347 17,907
Receivable from brokers 2,078 1,932 3,653
Other receivables 20,155 25,839 22,614
Deferred tax asset and income tax receivable 13,650 16,701 9,813
Other assets 11,538 9,879 11,481
Total assets $ 241,045 $ 223,821 $ 224,823
*Liabilities and stockholders' equity*
Payable for investments purchased $ - $ 2,980 $ -
Income taxes payable - - 282
Compensation payable 36,147 33,919 26,147
Accrued expenses and other liabilities 43,473 47,868 44,613
Sub-total 79,620 84,767 71,042
Subordinated Notes (due June 15, 2023) - - 33,691
Total liabilities 79,620 84,767 104,733
Stockholders' equity 161,425 139,054 120,090
Total liabilities and stockholders' equity $ 241,045 $ 223,821 $ 224,823
Shares outstanding 25,313 25,680 26,395
*GAMCO Investors, Inc. and Subsidiaries*
*Assets Under Management*
*By investment vehicle*
*(in millions)* *Three Months Ended* *% Changed From* *June 30,* *March 31,* *June 30,* *March 31,* *June 30,* *2023* *2023* *2022* *2023* *2022*
*Equities:*
Mutual Funds
Beginning of period assets $ 8,288 $ 8,140 $ 9,824 Inflows 168 242 230 Outflows (423 ) (378 ) (394 ) Net inflows (outflows) (255 ) (136 ) (164 ) Market appreciation (depreciation) 242 288 (1,302 ) Fund distributions, net of reinvestment (4 ) (4 ) (4 ) Total increase (decrease) (17 ) 148 (1,470 )
Assets under management, end of period $ 8,271 $ 8,288 $ 8,354 -0.2 % -1.0 %
Percentage of total assets under management 26.9 % 27.0 % 29.1 %
Average assets under management $ 8,165 $ 8,292 $ 9,071 -1.5 % -10.0 %
Closed-end Funds
Beginning of period assets $ 7,155 $ 7,046 $ 8,097 Inflows 1 24 59 Outflows (24 ) (15 ) (12 ) Net inflows (outflows) (23 ) 9 47 Market appreciation (depreciation) 191 233 (981 ) Fund distributions, net of reinvestment (128 ) (133 ) (127 ) Total increase (decrease) 40 109 (1,061 )
Assets under management, end of period $ 7,195 $ 7,155 $ 7,036 0.6 % 2.3 %
Percentage of total assets under management 23.4 % 23.3 % 24.5 %
Average assets under management $ 7,117 $ 7,211 $ 7,611 -1.3 % -6.5 %
Institutional & PWM
Beginning of period assets $ 10,764 $ 10,714 $ 12,674 Inflows 66 61 61 Outflows (297 ) (558 ) (297 ) Net inflows (outflows) (231 ) (497 ) (236 ) Market appreciation (depreciation) 502 547 (1,869 ) Total increase (decrease) 271 50 (2,105 )
Assets under management, end of period^(a) $ 11,035 $ 10,764 $ 10,569 2.5 % 4.4 %
Percentage of total assets under management 35.9 % 35.1 % 36.8 %
Average assets under management $ 10,628 $ 11,126 $ 11,702 -4.5 % -9.2 %
SICAV
Beginning of period assets $ 824 $ 867 $ 879 Inflows 48 124 169 Outflows (269 ) (176 ) (90 ) Net inflows (outflows) (221 ) (52 ) 79 Market appreciation (depreciation) (13 ) 9 (72 ) Total increase (decrease) (234 ) (43 ) 7
Assets under management, end of period $ 590 $ 824 $ 886 -28.4 % -33.4 %
Percentage of total assets under management 1.9 % 2.7 % 3.1 %
Average assets under management $ 683 $ 857 $ 910 -20.3 % -24.9 %
*Total Equities*
Beginning of period assets $ 27,031 $ 26,767 $ 31,474 Inflows 283 451 519 Outflows (1,013 ) (1,127 ) (793 ) Net inflows (outflows) (730 ) (676 ) (274 ) Market appreciation (depreciation) 922 1,077 (4,224 ) Fund distributions, net of reinvestment (132 ) (137 ) (131 ) Total increase (decrease) 60 264 (4,629 )
Assets under management, end of period $ 27,091 $ 27,031 $ 26,845 0.2 % 0.9 %
Percentage of total assets under management 88.2 % 88.1 % 93.5 %
Average assets under management $ 26,593 $ 27,486 $ 29,294 -3.2 % -9.2 %
*GAMCO Investors, Inc. and Subsidiaries*
*Assets Under Management*
*By investment vehicle - continued*
*(in millions)* *Three Months Ended* * * *% Changed From* *June 30,* * * *March 31,* * * *June 30,* * * *March 31,* * * *June 30,* *2023* *2023* *2022* *2023* *2022*
*Fixed Income:*
100% U.S. Treasury fund
Beginning of period assets $ 3,609 $ 2,462 $ 1,872 Inflows 931 1,845 1,036 Outflows (988 ) (732 ) (1,074 ) Net inflows (outflows) (57 ) 1,113 (38 ) Market appreciation (depreciation) 44 34 2 Total increase (decrease) (13 ) 1,147 (36 )
Assets under management, end of period $ 3,596 $ 3,609 $ 1,836 -0.4 % 95.9 %
Percentage of total assets under management 11.7 % 11.8 % 6.4 %
Average assets under management $ 3,618 $ 3,245 $ 1,936 11.5 % 86.9 %
Institutional & PWM Fixed Income
Beginning of period assets $ 32 $ 32 $ 32 Inflows - - - Outflows - - - Net inflows (outflows) - - - Market appreciation (depreciation) - - - Total increase (decrease) - - -
Assets under management, end of period $ 32 $ 32 $ 32 0.0 % 0.0 %
Percentage of total assets under management 0.1 % 0.1 % 0.1 %
Average assets under management $ 32 $ 32 $ 32 0.0 % 0.0 %
*Total Treasuries & Fixed Income*
Beginning of period assets $ 3,641 $ 2,494 $ 1,904 Inflows 931 1,845 1,036 Outflows (988 ) (732 ) (1,074 ) Net inflows (outflows) (57 ) 1,113 (38 ) Market appreciation (depreciation) 44 34 2 Total increase (decrease) (13 ) 1,147 (36 )
Assets under management, end of period $ 3,628 $ 3,641 $ 1,868 -0.4 % 94.2 %
Percentage of total assets under management 11.8 % 11.9 % 6.5 %
Average assets under management $ 3,650 $ 3,277 $ 1,968 11.4 % 85.5 %
*Total AUM*
Beginning of period assets $ 30,672 $ 29,261 $ 33,378 Inflows 1,214 2,296 1,555 Outflows (2,001 ) (1,859 ) (1,867 ) Net inflows (outflows) (787 ) 437 (312 ) Market appreciation (depreciation) 966 1,111 (4,222 ) Fund distributions, net of reinvestment (132 ) (137 ) (131 ) Total increase (decrease) 47 1,411 (4,665 )
Assets under management, end of period $ 30,719 $ 30,672 $ 28,713 0.2 % 7.0 %
Average assets under management $ 30,243 $ 30,763 $ 31,262 -1.7 % -3.3 %
Contact: Kieran Caterina
Chief Accounting Officer
(914) 921-5149
For further information please visit
*www.gabelli.com*