- 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, priva
