GBL Gamco Investors Inc

• September 30, 2022 AUM of $27.6 billion vs. $28.7 billion at June 30, 2022
  • Equity AUM was $24.9 billion at September 30, 2022 vs. $26.8 billion at June 30, 2022
• Revenues of $61.9 million vs. $75.9 million in year ago quarter
• Third quarter EPS of $0.36 per share vs. $1.09 per share in 2021 bringing 9 month EPS to $1.66 per share vs. $2.32 per share in 2021
• Ended quarter with $141.0 million in cash and investments (excluding seed investments) and no debt
• $74 million given to charities since IPO, including $48 million through our SDCC

GAMCO Investors, Inc. (“GAMCO”) (OTCQX: GAMI) today reported its operating results for the quarter ended September 30, 2022.

Giving Back to Society

Since the inception of GAMCO’s shareholder designated charitable contribution program in 2013, shareholders have designated charitable gifts of $48 million to approximately 350 charitable organizations, including $11.3 million in 2021. Since our initial public offering in February 1999, our firm’s combined charitable donations total approximately $74 million.

Sustainability Initiatives

To demonstrate our commitment to being good environmental stewards, we have waived the fees and absorbed all costs on the initial $100 million in assets in Love Our Planet & People (“LOPP”). LOPP, the first in a series of semi-transparent exchange traded funds (“ETFs”), invests in sustainability-focused companies including those engaged in renewable power generation and transmission, water purification and conservation, and the reduction of long-lived wastes. In addition, we have taken steps to offset our own carbon footprint by installing solar panels and charging stations at our offices.

Results for the Third Quarter

In the third quarter, the Company took several steps to position the Company for future growth, including redeeming the remaining $34 million of subordinated notes issued to shareholders, accelerated the vesting of 253,700 restricted stock awards (“RSAs”), and commencing the process of voluntarily moving the trading of its shares to the OTCQX which will free up resources for implementing growth strategies, with a focus on technology, client service, and marketing.

Financial Highlights (Unaudited) U.S. GAAP Basis Three Months Ended (In thousands, except per share data) September 30,2022 September 30,2021   Revenues

$

61,918

$

75,907

Operating income

 

18,001

 

40,676

Net income

 

9,427

 

29,161

  Diluted earnings per common share

$

0.36

$

1.09

  Weighted average diluted shares outstanding

 

26,370

 

26,832

Shares outstanding

 

25,904

 

27,096

  Assets Under Management AUM - end of period (in millions)

$

27,633

$

33,539

AUM - average (in millions)

 

29,999

 

34,625

On October 6, 2022, GAMCO filed Form 15, which suspended the requirement to file Forms 10-Q, 10-K, and 8-K with the SEC, we will continue to file PCAOB audited statements and reports similar to Forms 10-Q, 10-K, and 8-K with the OTC Markets as well as post them to our website.

On October 7, 2022, the Company’s shares started trading on the OTCQX under the symbol “GAMI”.

Revenues

• Revenues for the third quarter of 2022 were $61.9 million compared with $75.9 million in the third quarter of 2021.
• Investment advisory fees were $56.2 million in the third quarter of 2022 versus $69.1 million in the year ago quarter:
  • Fund revenues were $38.8 million compared to $48.0 million in the third quarter of 2021.
  • Institutional and Private Wealth Management revenues, which are generally billed on portfolio values at the beginning of the quarter, were $15.2 million compared to $19.2 million in last year’s third quarter.
  • SICAV revenues were $2.2 million compared to $1.9 million in the year ago quarter.
• Distribution fees from our equity mutual funds and other income were $5.7 million during the third quarter of 2022 and $6.8 million in the prior year quarter.

Operating Income

Operating income was $18.0 million versus $40.7 million in the third quarter of 2021. We note, on a comparable basis, the acceleration of RSAs during the third quarter of 2022 resulted in an additional $1.5 million of compensation expense.

Non-Operating Income

Mark-to-market investment losses were $1.8 million in the third quarter of 2022 versus losses of $1.2 million in the third quarter of 2021. Interest expense was $0.6 million in the third quarter of 2022 versus $0.8 million in the third quarter of 2021.

Income Taxes

GAMCO’s effective tax rate (“ETR”) for the quarter ended September 30, 2022 was 39.4% versus 24.5% for the quarter ended September 30, 2021.

Balance Sheet

GAMCO ended the quarter with cash and investments of $158.5 million.

Business Highlights

• The Gabelli U.S. Treasury Money Market Fund, which has the lowest cost of any 100% U.S. Treasury money market fund, benefitted from $868 million of net inflows during the third quarter of 2022 bringing the total assets in the fund to over $2.7 billion.
• On July 1st, Ellsworth Growth and Income Fund (NYSE: ECF) had a $25 million closing of a private placement of 4.40% Series B Cumulative Preferred Shares.
• On September 8th, we hosted our 28th Annual Aerospace & Defense Symposium in New York City. The symposium featured leading companies in the Aerospace and Defense industries.

Subsequent to the end of the 3rd quarter:

• On October 31st and November 1st, we hosted our 46th Annual Automotive Symposium in Las Vegas. The symposium featured presentations from senior management of leading automotive and electric vehicle suppliers.
• We will host our Fourth Annual Healthcare Symposium in conjunction with Columbia Business School on November 18th.

Return to Shareholders

During the quarter, GAMCO paid a dividend of $0.04 per share for a total of $1.1 million and purchased 491,093 shares for $8.8 million at an average price of $17.81 per share. From October 1, 2022 to November 7, 2022, the Company has purchased 75,697 shares at an average price of $14.62 per share.

On November 7, 2022, GAMCO’s board of directors declared a regular quarterly dividend of $0.04 per share, which is payable on December 27, 2022 to class A and class B shareholders of record on December 13, 2022.

About GAMCO Investors, Inc.

GAMCO is known for its research-driven value approach to equity investing (known in the trade as PMV with a CatalystTM). GAMCO conducts its investment advisory business principally through two subsidiaries: GAMCO Asset Management Inc. (approximately 1,400 institutional and private wealth separate accounts, principally in the U.S.) and Gabelli Funds, LLC (24 open-end funds, 14 closed-end funds, 4 actively managed semi-transparent ETFs, and a SICAV). GAMCO serves a broad client base including institutions, intermediaries, offshore investors, private wealth, and direct retail investors. In recent years, GAMCO has successfully integrated new teams of RIAs by providing attractive compensation arrangements and extensive research capabilities.

GAMCO offers a wide range of solutions for clients across Value and Growth Equity, ESG, Convertibles, sector-focused strategies including Gold and Utilities, Merger Arbitrage, and U.S. Treasury Money Market Fixed Income. In 1977, GAMCO launched its flagship All Cap Value strategy, Gabelli Value, and in 1986 entered the mutual fund business.

  Table I: Assets Under Management and Fund Flows - 3rd Quarter 2022 (in millions) Fund Market distributions, June 30, appreciation/ net of September 30, September 30,

2022

 

Inflows

 

Outflows

 

(depreciation)

 

reinvestments

 

2022

 

2021

Equities: Mutual Funds

$

8,354

$

189

$

(367

)

$

(482

)

$

(5

)

$

7,689

$

9,856

Closed-end Funds

 

7,036

 

25

 

(43

)

 

(312

)

 

(126

)

 

6,580

 

8,238

Institutional & PWM (a)

 

10,569

 

64

 

(426

)

 

(375

)

 

-

 

 

9,832

 

13,051

SICAV

 

886

 

78

 

(146

)

 

(33

)

 

-

 

 

785

 

728

Total Equities

 

26,845

 

356

 

(982

)

 

(1,202

)

 

(131

)

 

24,886

 

31,873

  100% U.S. Treasury Money Market Fund

 

1,836

 

1,705

 

(838

)

 

12

 

 

-

 

 

2,715

 

1,634

Institutional & PWM Fixed Income

 

32

 

-

 

-

 

 

-

 

 

-

 

 

32

 

32

Total Treasuries & Fixed Income

 

1,868

 

1,705

 

(838

)

 

12

 

 

-

 

 

2,747

 

1,666

Total Assets Under Management

$

28,713

$

2,061

$

(1,820

)

$

(1,190

)

$

(131

)

$

27,633

$

33,539

  (a) Includes $184, $173, and $178 of 100% U.S. Treasury Fund AUM at June 30, 2022, September 30, 2022, and September 30, 2021, respectively.     Table II GAMCO INVESTORS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data)   Three Months Ended Nine Months Ended September 30, September 30,

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

  Investment advisory and incentive fees

$

56,215

 

$

69,147

 

$

180,225

 

$

199,502

 

Distribution fees and other income

 

5,703

 

 

6,760

 

 

16,919

 

 

19,957

 

Total revenues

 

61,918

 

 

75,907

 

 

197,144

 

 

219,459

 

  Compensation costs (a)

 

29,539

 

 

21,965

 

 

82,812

 

 

83,945

 

Management fee expense (a)

 

1,730

 

 

-

 

 

3,407

 

 

5,552

 

Distribution costs

 

6,599

 

 

7,781

 

 

20,416

 

 

22,523

 

Other operating expenses

 

6,049

 

 

5,485

 

 

18,282

 

 

19,460

 

Total expenses

 

43,917

 

 

35,231

 

 

124,917

 

 

131,480

 

  Operating income

 

18,001

 

 

40,676

 

 

72,227

 

 

87,979

 

  Investment gain/(loss), net

 

(1,793

)

 

(1,218

)

 

(8,354

)

 

2,735

 

Interest expense

 

(648

)

 

(814

)

 

(2,235

)

 

(2,101

)

Non-operating gain/(loss)

 

(2,441

)

 

(2,032

)

 

(10,589

)

 

634

 

  Income before income taxes

 

15,560

 

 

38,644

 

 

61,638

 

 

88,613

 

Provision for income taxes

 

6,133

 

 

9,483

 

 

17,471

 

 

26,401

 

Net income

$

9,427

 

$

29,161

 

$

44,167

 

$

62,212

 

  Net income: Basic

$

0.36

 

$

1.11

 

$

1.68

 

$

2.36

 

Diluted

$

0.36

 

$

1.09

 

$

1.66

 

$

2.32

 

  Weighted average shares outstanding: Basic

 

26,152

 

 

26,222

 

 

26,319

 

 

26,310

 

Diluted

 

26,370

 

 

26,832

 

 

26,604

 

 

26,863

 

  Actual shares outstanding (b)

 

25,904

 

 

27,096

 

 

25,904

 

 

27,096

 

(a) The CEO waiver reduced compensation costs by $0, $10,063, $9,909 and $10,063, respectively, and management fee expense by $0, $2,858, $2,108 and $2,858, respectively. (b) Includes 149 and 909 RSA shares at September 30, 2022 and 2021, respectively.     Table III GAMCO INVESTORS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In thousands)   September 30, December 31, September 30,

2022

2021

2021

  ASSETS Cash, cash equivalents, and U.S. Treasury Bills

$

112,274

$

142,027

$

152,615

Investments in securities

 

28,744

 

20,259

 

17,737

Seed capital investments

 

17,464

 

12,085

 

11,824

Receivable from brokers

 

3,241

 

3,930

 

4,629

Other receivables

 

22,569

 

34,943

 

28,137

Deferred tax asset and income tax receivable

 

10,216

 

6,707

 

9,058

Other assets

 

10,718

 

11,721

 

12,330

Total assets

$

205,226

$

231,672

$

236,330

  LIABILITIES AND STOCKHOLDERS' EQUITY Payable for investments purchased

$

-

$

14,990

$

75

Income taxes payable

 

750

 

315

 

2,414

Compensation payable

 

37,932

 

21,049

 

47,767

Accrued expenses and other liabilities

 

45,094

 

50,448

 

45,787

Sub-total

 

83,776

 

86,802

 

96,043

Subordinated Notes (due June 15, 2023)

 

-

 

50,990

 

52,102

Total liabilities

 

83,776

 

137,792

 

148,145

  Stockholders' equity (a)

 

121,450

 

93,880

 

88,185

  Total liabilities and stockholders' equity

$

205,226

$

231,672

$

236,330

(a) Shares outstanding of 25,904, 26,728, and 27,096, respectively.  

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, the effects of the Tax Cuts and Jobs Act, 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, a general downturn in the economy that negatively impacts our operations, and the ongoing impacts of the Tax Cuts and Jobs Act with respect to tax rates and the non-deductibility of certain portions of named executive officer compensation. 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 on Form 10-K 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

View source version on businesswire.com: https://www.businesswire.com/news/home/20221104005593/en/

Kieran Caterina Chief Accounting Officer (914) 921-5149 For further information please visit www.gabelli.com